The company confirmed on Thursday that it will not proceed with the British phase of the project for now, saying work will resume only when conditions support long-term investment.

Stargate UK, developed with Nvidia and British developer Nscale, was announced in September 2025 as part of a plan to expand global data centre capacity.

The project was expected to deploy up to 31,000 AI chips and strengthen the country’s ability to run its own artificial intelligence systems.

That capacity, usually called sovereign compute, allows a country to manage sensitive data and AI workloads locally instead of relying on overseas providers.

OpenAI said in a statement: “We see huge potential for the UK’s AI future. AI compute is foundational to that goal, we continue to explore Stargate UK and will move forward when the right conditions such as regulation and the cost of energy enable long-term infrastructure investment.”

The decision is a setback for the UK government as Prime Minister Keir Starmer has made artificial intelligence central to his economic plans and wants Britain to attract more global tech investment.

Officials insist talks are still ongoing. A spokesperson said the government is “continuing to work with OpenAI and other leading AI companies to strengthen UK compute capacity”.

At the same time, they pointed to more than £100 billion in private investment that has flowed into the UK’s AI sector since 2024.

The cost of energy is also a big issue. Britain has some of the highest electricity prices in Europe, and large data centres require vast amounts of power to run and cool advanced chips. Regulation is another concern, especially those around data use and copyright.

OpenAI has been expanding its data centre footprint in other regions. Its Stargate programme includes projects in the United States, Norway and the United Arab Emirates. The first major campus is already underway in Texas.

The pause in the UK also comes as the company strengthens its focus. It has scaled back some side efforts and is concentrating more on core services like ChatGPT.

Competition is increasing, with companies such as Anthropic and Google pushing ahead with their own systems.

Despite the Stargate project delay, OpenAI says it will continue discussions with the UK government, including plans to support public services with its technology.

For now, the project is on hold, with no timeline for when work might begin.

This expands British AI infrastructure, and drives collaboration on security research.

Technology Secretary Peter Kyle said, “AI will be fundamental in driving the change we need to see across the country – whether that’s in fixing the NHS, breaking down barriers to opportunity or driving economic growth. This can’t be achieved without companies like OpenAI, who are driving this revolution forward internationally. This partnership will see more of their work taking place in the UK.”

Central to the partnership is the government’s £1 billion investment plan aimed at scaling Britain’s public compute capacity twenty-fold over the next five years. This infrastructure growth is expected to support the development of sovereign AI technologies and national data centres, essential to the UK’s vision of AI self-sufficiency.

OpenAI, whose London office has grown to over 100 researchers and engineers since opening in 2023, is expected to expand its presence in the country further. According to the company, Britain ranks among its top three global markets for paid subscribers and API developers. 

Sam Altman, OpenAI’s CEO, described AI as “a core technology for nation building that will transform economies and deliver growth.” He added, “Britain has a strong legacy of scientific leadership and its Government was one of the first to recognise the potential of AI through its AI Opportunities Action Plan. Now, it’s time to deliver on the plan’s goals by turning ambition to action and delivering prosperity for all.”

The AI Opportunities Action Plan, launched in January 2025, includes 50 recommendations aimed at transforming the UK’s technological sector.

Key areas of focus include developing sovereign AI infrastructure like data centres and compute clusters, transforming public services in healthcare, justice, and education, and creating regional AI Growth Zones in Scotland and Wales. These zones are expected to drive innovation, create jobs, and attract private investment.

OpenAI’s technologies are already embedded in various UK government tools. Its GPT-powered chatbot helps small businesses navigate regulatory frameworks on GOV.UK, while ‘Humphrey’, Whitehall’s internal AI assistant, accelerates administrative tasks.

Another tool, ‘Consult’, leverages AI to sort public consultation responses in minutes, a process that typically takes civil servants weeks.

Beyond public services, the partnership will explore AI applications in areas like justice (automating legal triage and appeals), defence (cyber intelligence and threat detection), and education (developing personalised AI tutors for STEM subjects).

Discussions also include expanding OpenAI’s work with the UK’s AI Security Institute to develop advanced security research collaborations and a new technical information-sharing programme.

The Labour Government, facing sluggish economic growth and high political pressure, sees AI as an essential driver for reversing its economic fortunes. Officials estimate that AI adoption could lift UK productivity by 1.5% annually, injecting an additional £47 billion into the economy every year over the next decade.

OpenAI’s expansion is expected to generate high-paying tech jobs and attract billions in foreign investment, enhancing the UK’s competitive edge in AI.

With the United States, China, and India advancing rapidly, British policymakers believe that securing partnerships with AI leaders like OpenAI is important to safeguarding national interests and economic growth.